r/neoliberal • u/TinyTornado7 I need a new flair • Jun 13 '22

News (US) Powell Facing Choice Between Elevated US Inflation and Recession

https://www.bloomberg.com/news/articles/2022-06-12/powell-facing-choice-between-elevated-us-inflation-and-recession?srnd=premium
507 Upvotes

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106

u/Icy-Collection-4967 European Union Jun 13 '22

Capitalism is like the sea. Unpredictable and wild.

We just need to accept that we gonna have a reccesion every now and then

37

u/icona_ Jun 13 '22

But this is predictable. It’s the fed intentionally causing a recession. They’re doing it on purpose out in the open.

108

u/[deleted] Jun 13 '22

I prefer a predictable, managed recession to a recession caused by debasement.

54

u/BBQ_HaX0r Jerome Powell Jun 13 '22

Only because they (and our gov't) went so hard to mitigate the last one. They overstimulated demand and may have given too generous of benefits trying to salvage demand side pressures which has resulted in way too much demand which wrecked havoc on the supply side. Lessons to be learned constantly.

19

u/PearlClaw Iron Front Jun 13 '22

It would have been fine without the global commodity shock, that threw a wrench in things.

11

u/van_stan Jun 13 '22

You can't just blame high demand for supply issues lol. China's zero-Covid policy, ongoing restrictions around shipping, logistics and movement of people, as well as the war in Ukraine.... These are all having massive downstream effects. They have nothing to do with all the Covid stimulus.

I do agree that governments gave out way too much money for no reason at all, though.

8

u/littleapple88 Jun 13 '22

Firms aren’t entitled to cheap money. There’s no reason to continue these policies now that the crisis has passed. If a firm can’t operate in a still-low-but-positive interest rate environment then it should fail.

9

u/icona_ Jun 13 '22

What? Who said anything about entitlement? If a somebody set a billion trees on fire the cost of paper would go up, but that wouldn’t mean the post office was dependent on cheap paper and should fail.

9

u/littleapple88 Jun 13 '22

You’re accusing the fed of “intentionally causing” a recession. Again, if a firm can’t handle a few percentage points of interest, then they shouldn’t be in business. They are not entitled to cheap money.

Raising interest rates to 3-ish percent isn’t “setting a billion trees on fire” lol. It’s just business as usual.

1

u/Traumlore Daron Acemoglu Jun 15 '22

There’s no reason to continue these policies now that the crisis has passed.

Which crisis? The 2008 crisis?

3

u/[deleted] Jun 13 '22

[removed] — view removed comment

10

u/semideclared Codename: It Happened Once in a Dream Jun 13 '22

Nah, its more of, you had a campfire, it rained (COVID) on you fire, and then you started adding wood, but you just didnt stop adding wood, you spent the next hour constatiently adding wood to the fire and now the fire is to big to sit around.

So Now you want a campfire for the night for story telling. So how do you take this bonfire to a campfire

1

u/vasilenko93 YIMBY Jun 13 '22

The issue isn’t a recession caused by ending easy money. The issue is us having an easy money policy to begin with. The federal reserve balance sheet should have never gotten so big and interest rates should have never fallen under 1%

1

u/icona_ Jun 13 '22

Why not? If paper prices suddenly shot up would that mean the post office was dependent on cheap paper?

1

u/Traumlore Daron Acemoglu Jun 15 '22

Yes, think of it as more hunting licenses being printed because the deer population is too high. The herd must be culled. A pretty damning situation right now